Step 1: Understanding the Concept:
Colloidal solutions are classified based on the dispersed phase and the dispersion medium.
Step 2: Detailed Explanation:
\begin{itemize}
\item Fog: Tiny liquid water droplets dispersed in air (gas). So, dispersed phase is liquid, dispersion medium is gas.
\item Smoke: Solid in gas.
\item Foam: Gas in liquid.
\item Cloud: Liquid in gas.
\end{itemize}
Step 3: Final Answer:
Fog is a colloidal solution of liquid in gas, option (C).